Investment Philosophy: Jenny Heller emphasizes a long-term investment horizon, focusing on strategies that align with a 10 to 20-year view, particularly for multi-generational family wealth management.
Manager Selection: The process involves assessing a manager's strategy, team, and culture, with a focus on understanding their competitive advantage and ensuring their returns are consistent with their stated process.
Active vs. Passive Investing: Heller views passive investing as a benchmark for active management, particularly in long-only strategies, and stresses the importance of active management meeting the hurdle of passive returns, especially for taxable investors.
Private Equity Opportunities: There is a strong interest in small, niche private equity opportunities, including micro-strategies and long-term buy-and-hold models, despite challenges in compensation structures and manager credibility.
Tax Considerations: Managing taxable money requires a focus on minimizing turnover and understanding the tax implications of investment decisions, which adds complexity compared to managing endowment funds.
Learning and Adaptation: Heller discusses the importance of iterative learning and adapting processes, using design thinking to foster open-minded problem-solving and continuous improvement within her team.
Mentorship and Community: The value of mentorship and building a community of peers is highlighted, with Heller having established a network of allocators to share insights and support each other in the investment industry.
Transcript
[Music] Hello, I'm Ted Sides and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation through conversations with the leaders in the money game. We learn how these holders of the keys to the kingdom allocate their time and their capital. You can join our mailing list and access premium content at capitalallocators.com. >> All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is forformational purposes only and should not be relied upon as a basis for investment decisions. Clients of Capital Allocators or podcast guests may maintain positions in securities discussed on this podcast. With eight years and over 500 podcasts under my belt, I'm often asked to recommend my favorite episode. But I can't really answer that question. I feel like I have 500 children and don't think I've disowned a single one. So when asked, I usually offer up a great recent episode to get a listener started. Finding the best episodes in a big library of content isn't easy, so we thought we'd help. Each summer going forward, we're going to share our best. Over 7 weeks, we'll replay conversations curated from our favorites and yours, excluding those from the last 12 months. Our 2025 summer series focuses on CIOS. We're blessed to have an incredible library of long shelf life content, and we just couldn't pick seven. Instead, we'll share a dozen gems canvasing every type of institutional asset owner. This week's summer series is a multifamily office twofer with Stan Miranda, co-founder and chairman emeritus of Partners Capital and Jenny Heler from Brandywine. Both firms started as multif family offices that have evolved in different ways. Partners Capital has grown and scaled as a leading OCIO, while Brandywine has remained a boutique with a fixed set of family clients. Before we get to the interview, a quick announcement. We've set new dates for our capital allocators university for investor relations and business development professionals. Those dates are December 3rd and 4th in New York City. Later in the year is just a better time of year for this gathering. It's post AGM season. When travel starts to wind down, it's right before the holiday crunch time and it's a great time for capital raisers to reflect on their previous year and plan for the year ahead. December 3rd and 4th in New York City. Cau for IRBD is a closed dooror gathering for capital raisers to connect with peers, learn from allocators and other experts, and really share in best practices with each other. You can learn more at capitaloc.com/un university. Thanks so much for spreading the word about Capital Allocators University for investor relations and business development professionals. Please enjoy my conversations with Stan Miranda from 2023 and Jenny Heler from episode 7 back in 2017 and a follow-up in 2021. >> Jenny, thanks for joining me. >> Thank you so much, Ted. >> So, it's really fun starting just at the beginning. How did you first get interested in investing? Well, I'm not one of those people that has been interested in investing since middle school or grade school. My dad is a doctor, my mom is a attorney and an art historian. And when I got my first job at Meil Lynch in investment banking, they both thought I was going to be a stock broker. And the reason I ended up there quite honestly is because I developed a little bit of an interest in micro finance in college. I spent a semester in South Africa and I was a liberal arts political economy major and I knew that I knew nothing about what a balance sheet was or an income statement was and I needed to get some training. So that's how I started in banking and even then I wasn't sure where I was going to go but I I learned a little bit about the endowment world when I was there and >> from investment banking >> from investment banking and it was largely sort of a post 911 crisis moment when I said this is not what I want to be doing with my life. Uh but I I enjoyed the analytical side of the job. I really didn't like selling uh and I wasn't good at it frankly. So, I was searching around, you know, uh, my college website, seeing what jobs were open. I saw a job at the Stanford Endowment and I said, "Wow, this is a really cool intersection of finance and kind of the nonprofit world, which I wanted to move back towards and I begged them for eight months to give me a job until they finally >> So, circle back for a second. What was that micro finance like? How did you first get interested in it? And what was the experience like? I spent a so when a lot of my friends were going to Europe in college to do their semester abroad, I decided I wanted to go to South Africa. I don't know what drew me there. I think uh I traveled a lot as a kid with my parents to developing economies and I really had a love for it and I knew that there would be something there to learn as a political economy major four years post aparttheid. It just seemed like a a really interesting time to be there. And when I was there, I was in a program that was very focused on experiential learning and very focused on sort of letting us find our path in terms of what we were interested in. And I connected with an economics professor that gave me Muhammad Ununice's book. Muhammad Ununus is a guy that founded the Gine Bank. And I read his book and it just sort of opened my eyes. Of course, here I am now working, you know, running a family office. So clearly my my life has taken some twists and turns, but it it just really excited me. >> And so was there a moment or an insight you had in that experience in South Africa that stayed with you till today? >> Oh my goodness, that's a great question. I think well it's interesting. I've I've now spent time a little bit of time living in two countries very very different from the US. So I spent that period of time in South Africa and I also spent six months living in India prior to business school working for an NGO trying to scratch my micro finance itch and I think some learnings have coming have come out of both of those experiences. One that you have to have a lot of patience for the time and the pace in which things move in other countries. you often have to slow yourself down a lot largely because especially at the times I was I was there you know these economies were a lot less efficient and you know in India for example getting a package to my parents mailed meant spending an hour at the post office watching someone tie up the package with strings and it could be incredibly infuriating but I think there's a lot of value to slowing down and learning to take your time and allowing that time allowing yourself I guess the time and the space to open up and really absorb a culture. There's just such tremendous value in that. It's something I want to offer my kids. >> We'll get to families a little later, I think. So, we'll come back. You you landed at Stanford Endowment and what year was that? >> That was in 2002. >> Pretty early on in people understanding sort of endowments today are in the newspaper every year for their performance, but that was that was a lot before that. And who was was that under John Powers? >> Under Mike McCaffrey. >> Oh, right. Under Mike. Okay. >> Yeah. >> And what was your experience like? >> It was incredible. I It was just It was quite frankly a huge relief coming from the banking world. I had the pleasure of being at the Stanford Management Company at a time when there was just a lot going on. Mike was a pretty new CIO. I was working for a portion of the endowment that had been a little bit undermanaged historically. It was 11 different school and department funds. the sort of mini endowments that all of the schools there had and you know they had an incredible amount of assets because we just been through sort of the tech runup and then the tech collapse but there was still a lot of value that had been created during that period but no one had ever really looked closely at those assets. So it was my job as an analyst or associate I guess they called me at the time to try to make some sense of that and you know put information together in a way that would be usable for folks which ended up being an incredible training across asset classes because these these assets were so diverse but it was also just a really exciting time to be working for the endowment because the team was quite new. There was a lot of energy. There were a lot of folks that had actually come from the banking world there. So I think there was a really high high level of sort of discipline and work ethic there but also a lot of freedom to kind of figure things out. So I just I fell in love with the work and I also this was on the advice of my husband I tend to romanticize jobs and he always would say you know pay attention to what the senior people are doing every day and is that work that you think you love. And the truth was I loved the work that the senior people were doing. you know, I'd get to sit in on weekly meetings with them and I loved the breadth of the work. I loved that they were meeting with really really smart people all the time. Um, and I loved that they were having a tangible impact. So, it was fun. >> And how long did you stay? >> I stayed there. So, it was it was structured as sort of a pre-business school experience. I was supposed to stay there 2 years. I ended up sort of compromising with my boss at the time to stay 2 and 1/2 years and then spend 6 months in India. um before business school so I could make sure that I understood what path I wanted to go down post business school because I I sort of view that period in anyone's life as a freebie period where you can take a lot of risk postgraduate school you have to kind of start to focus a little more on what you want your career to look like >> and so when you were go it sounds like you had a passion for this work before you went to school what happened at school was there anything that came up that made you think huh maybe I should try something else or did you just continue down that path path with with great to your experience. >> Well, it seemed so boring to me that I would keep doing the same thing I'd done before school. I just never thought I'd be one of those people. The time I spent in India taught me that I did not want to go into the full sort of nonprofit micro finance world. >> Talk about that a little more. What happened that changed that thought process? >> Well, I was working for, you know, a really interesting NGO there that had a big micro finance arm and a public private partnership arm. It was very well funded by the World Bank. It it seemed like sort of the perfect institution to really explore that passion. And I I frankly found the work incredibly frustrating. And it it was frustrating probably because I came in with a degree of arrogance about what I could bring to an organization that I knew nothing about. There was no reason they needed me there quite frankly. But the pace at which they moved was not only slow, but I I think I was frustrated because the institution was more focused on getting grants from the World Bank than they were on making a difference. I think they wanted to make a difference in people's lives, but they didn't always know how. And so so much of the program ended up being oriented around earning the next grant that there wasn't enough focus sometimes on just the blocking and tackling that was involved in trying to make very poor women's lives better. And I think there's some things the organization did very well. But you know as an outsider looking in there are times when you come into a new place and you see things that seem glaringly obvious. They were involved in some public private partnerships for example that were actually losing money for the people that they were trying to support but they looked really good on paper. It looked really good to say you had a partnership with ex large agriculture firm or ex retailer. So I think I was a little disillusioned by that. I also think frankly in India at the time talent wasn't rushing towards the nonprofit sector. It just that's a luxury. It's a luxury to be able to work in a nonprofit to a degree. But you know I think when you're when you're in a really fast growing economy talent wants to rush towards technology. They want to rush towards finance. So so there was a bit of a talent gap in the sector and smaller organizations were figuring it out and filling it. But bigger organizations I don't think we're doing such a good job. Secondarily I realized I didn't want to live in I think the best work is being done on the ground in a lot of developing countries when it comes to not just micro finance but any sustainable development work. and my friends and my family and my husband are all here and that's very practical. It was a question someone asked me when I was applying to business school if I was realistic about my goals and I wasn't realistic. I I the truth is I I love being an American. >> Yeah. Well, there's some definite benefits of being an American. Just to to dive a little deeper on the first part of that, do you think that the experience you had was pervasive across other NOS and other nonprofits at the time or was it specific to the one you were working for? >> I found some remarkable nonprofits when I was in India and I thought a couple of times about switching over to a smaller organization that I thought was doing just had better metrics for measuring themselves. You know, what gets measured gets managed. But I was only there for six months and I felt I'd made a commitment to this organization and I needed to give it its fair shake. It just didn't seem right to kind of jump ship after two months. Even if they didn't need me, I just felt I'd made a commitment to them. But there were some incredible small organizations and I don't want to be hard on on the world of NOS's and nonprofits. I think there's a lot of amazing organizations out there. I just think my experience with this particular organization and specifically sort of the unit I was working in within this specific organization was disappointing relative to my very lofty expectations. Yeah. So, >> you know, there's one other little thread that is kind of interesting. So, you were at the Sanford Endowment just after the bubble had popped. >> Yes. >> And so, you're probably aware of all these then.com companies that were building traffic, losing money so that somewhere down the road they'd have an audience and presumably could sell a product. the pets.com aren't here anymore. So, most of them didn't work. Was there any chance that the organization you were working for was making these sort of higher profile presumably with multinational partnerships to build their brand so that they could do something better with it in the future. It sounded the way you were saying it a little more like you're not sure the business plan was was along those lines. You know, I think it's an interesting question and there can be value to brand building in any organization and maybe at times you do that at the expense of the bottom line, whatever that bottom line looks like. I frankly am not sure that well a couple of things. One, I think sometimes the best and I feel a little silly talking about this given where I work and given that it's not my expertise, but outside looking in, I wonder if sometimes the best nonprofit ideas aren't easily scalable. Paul Farmer talks about this a bit and it's well at least in Mountains Beyond Mountains the book that was written about him. You know he had this incredible way to bring health care to the developing world but the scalability piece was the reason he didn't get funded for a long time and yet his outcomes were phenomenal. So I think figuring out how to scale a nonprofit is an incredible challenge. This organization was doing some things incredibly well that worked at scale. They had built a movement of women in who really didn't have a voice in rural India and that was powerful and I think there did matter but I think their issue was that they weren't focused anymore. Um so they had they built this movement and they gave women a voice and they organized women which was a powerful thing at the time and then they built a micro finance bank which was very successful and then they started building all these ancillary vehicles which were kind of not so successful and I think they were building on their brand to do that but I don't think anyone was kind of taking a step back and saying what should we focus on and maybe we can put all of our brand equity and our energy into the one or two things we do really really well and let other folks try to solve these other problems. >> Yeah. Some great business lessons right there >> for sure. >> So, we leave business school and where did you end up? >> I ended up at the Alfred Peaceloan Foundation in New York >> with Bill Peterson. >> With Bill Peterson, who is amazing and to this day is one of the best mentors I've ever had and remains a very close friend. >> And what is it? What was it about Bill and mentorship that you learned from him in this business? Well, for anyone that's listening that knows Bill, he is honest, maybe to a fault. He has one of the most active minds I've ever seen. He never stops thinking. He never stops questioning. He He viewed himself as the chief cynic and could get to the heart of what mattered in like 30 seconds or less. He's deeply passionate about investing and he was, you know, deeply passionate about the institution he worked for. He really built that endowment for 16 years. I hope I have that time period right, Bill, if you're listening to this. And he he's someone that taught me by doing and by acting. You know, he wouldn't he wasn't one to sort of sit down and have lengthy conversations with me about the meaning and of life. He would show me how to invest just by being actively engaged in every aspect of our portfolio, asking really hard questions of me and of our managers and just being up for any type of discussion on investing. And I think it was a powerful way to he would always tell me that he enjoyed mentoring more than managing, but I think that's what he needed to do. and he, you know, it's a statement that everyone that's left the Sloan Foundation has ended up in really interesting spots, I think, because because of Bill's teaching. >> Yeah, I know. It's something he's very proud of. I've talked to him about that. >> And how long did you stay? >> Uh, I was there about 5 years. >> And what different roles did you play? I know it's it's a small team. >> It was it's it was a very small team, remains a small team, but when I started, it was me, Bill, and Joe Borer. So, there were three of us managing the portfolio. I was one of two directors and had the least experience by far. Uh both Bill and Joe had been working together for a long time. Both very experienced investors. I came in right out of business school and I think they were willing to take a chance on me because it seems like I've top ticked a lot of places I've worked. I I went there just before the global financial crisis. It ended up being this incredibly exciting period there because I got to be the new opportunities person by default. We were all generalists, but Bill and Joe had built this portfolio and then had to see it through a period of crisis, which they did remarkably well, but I had the benefit of and I mean, everything we did was team-based, but the fact that I hadn't been there when the investments are made, I think just allowed me to kind of step out and troll around for new stuff. And, you know, Bill gave me the the freedom to do that. So I ended up getting to spend some time, you know, looking at the structured credit market and mortgage back securities and all the things that, you know, had blown up all of a sudden became incredible opportunities for investment. So that that was the investment side. And in terms of other roles, I think there you know as a group having some fresh blood allowed us to build more process. We hired our first associate. So there was that was really you know an early experience for me in managing someone very bright who was a little bit younger than I was but not that much younger. So that was a piece of it too. >> And h how did you decide to leave? I I found myself I was getting a couple of calls from recruiters after a couple years and I at some point I started picking up the phone and I started listening to what they had to say and occasionally when opportunities sounded interesting and there were a few things I looked at over the years I found myself interviewing and taking myself relatively far down certain processes and I was a little concerned with why I was doing that and I called a mentor of mine from from graduate school and I said can I talk to you about this. You know, I I said, I I'm thinking about this opportunity. What should I do? And he said to me, you know, this is the second time you've called me about an opportunity you're thinking about. I think the bigger question is why you're interviewing, not whether this is the right opportunity or not. And this was not Brandy Wine at the moment, but he said, either you're going to be one of these people that wants to jump around a lot in life. That's okay. Or maybe you're getting a little bored and maybe you've hit a certain plateau in your learning and you're ready for another leap. And I sat with that for another year or two. And when I got the call about Brandy Wine, it it scared the heck out of me. >> It really >> always a good sign. >> It was a great sign. It it seemed like a leap. So that was the first, you know, the first thing was understanding that I was walking towards something that scared me, which I think is something you always have to do in your life, even though it never feels particularly good in the moment. And then I got to know a lot more about the organization and the governance and the families and the just the investment opportunity here. and it was like this is a no-brainer. I mean, it it's one of these once in a-lifetime opportunities to build something at a place that that has this incredible track record in history. >> So, let's frame where you're sitting today. So, you took the helm at Brandy Wine Trust Group and today you're the chief investment officer for a small group of families with a lot of money. How do you think about or how do you frame the challenge of taking a large pool of money and putting it to work in the markets? Well, I think some of the thinking was done for me before I got here. So, to just give a little bit of background on how we're structured, you know, we we manage money for a handful of families, a smaller group of them own the management company and are still the bulk of the assets. So, in many ways, we feel more like a single family office. And what the families have in common, they all have a very, very long time horizon. they're all able to take a high degree of ili liquidity risk, take a 10 or 20 year view or even longer in many cases when they think about the markets. And I think the, you know, we sort of view ourselves as having a fiduciary and an investment challenge that need to be married together. So the reason that Brandy Wine started as a trust company and it was a very deliberate action by the four founding families 25 years ago is they thought it would be the best way to manage their assets long-term to ensure that they had a multi-generational approach to managing their wealth. It it gives us very clear fiduciary goals and make sure that everyone is on the same page. And then on the investment side, for the most part, we manage our assets through pooling. And that again means that everyone's getting access to the same opportunities. And it allows my team and I to spend all of our time focusing on optimizing these pools. It doesn't mean that families don't have some assets sitting outside of the pools because that's the nature of families. There's always going to be stuff that they that they have that is unique to them. But we're spending a lot of our time and energy on thinking about the best way to invest a global equity portfolio broadly for taxable investors or a we'll call it a hedge fund portfolio. I know that's a silly thing because hedge funds aren't really an asset class, but a diversifying portfolio in the marketable space. The best way to create a private equity program for families. So, it simplifies my life. I don't have to find a manager and say, "No, who which family does this fit with?" It's just let's find the best managers we can and put them together into in a way that makes sense and offer our families kind of a sample asset allocation that makes sense for a very long-term investor and different family members are going to have higher or lower risk tolerances. Our trust company in Delaware spends a lot of time working with our families on that. But we also encourage and I think our families naturally think about themselves in aggregate. So when you when you roll all their assets together, what does it sort of look like? Does it make sense? Are the right assets sitting at the right level? I don't know if I really answered your question there. >> Yeah. No, that's a that's a good start. So, let's talk a little bit about what you believe about investing and the process of investing and as a starting point to dive in a little bit deeper on how you go about managing these pools. >> So, I think they're slightly different per pool, but the overarching framework is that everything we do is with an incredibly longterm time horizon. So, we're not thinking about monthly volatility, for example, or even quarterly returns when we're investing in a manager. So how does that translate into because these managers have clients that might be thinking shorter term than that. So how does it translate into how you go about either looking for certain managers or the research you do or the decisions that you make? >> Sure. So you know we have a framework that we use that actually permeates everything we do in many respects that where we really focus first on what a manager's process is, what their strategy is and then what their team and culture is. And those are really, you know, in many ways sort of there's a lot of touchyfey qualitative stuff going on in there. Trying to figure out whether a manager has a competitive advantage in what they do relative to what is often a very efficient market. That's a piece of it. And then thinking about the complexity of what we what they do. Is it something that we can really understand? Is it something that they understand? It's shocking. I think sometimes managers use a lot of jargon when they talk about what they do. And when you ask really basic questions, even they have a hard time explaining it sometimes. And then understanding whether they've built a firm and a team that marries with their process. So there's no one right way to build a firm or a team or a culture even, but it really has to marry with what they're trying to achieve. And then we back that up with looking at what we call their quality of returns. So rather than just saying, have they performed well, it's trying to really disagregate their returns and understand how they've made money. Has that changed over time? Is the way they've m they're making money, does it marry with what they say their processes and what they say they're doing? And do we think that it's repeatable? You know, there are point in time strategies. We tend to be less drawn to those than strategies that we think are durable over multi-deades hopefully understanding that organizations change. But I think that marries with another core reality that we have is that we are managing taxable money. And that means that the cost of wrong decisions is really high because if we redeem from a manager, we're often reinvesting a 75 or 80 cent dollar. So that means that the next manager has to be that much better. >> 75 or 80 cent dollar because of taxes or >> Yeah. Because we all of a sudden you're locking in realized gains and especially if you've had a manager in a portfolio for a long time. the our average hold for a manager is over 11 years. We try to keep our turnover very low and you know I think that gives us some really the ability to form partnerships really with managers but but we also recognize when we're going in that the cost of that decision is going to get higher and higher with every year that we're invested because hopefully the manager compounds makes a lot of money for us but but then to to move on to something else there's a tax cost to that beyond a reputational cost. So does the the necessity going in, not the necessity, the desire going in to have a really long investment horizon, does that translate into you're looking for a certain type of existing stability in a manager from the get-go? So maybe they're a little bit larger in size because you don't have to worry that that there's business risk as one example. >> I would say in some ways the opposite is true. We do we have some managers in our portfolio for sure that have been in existence a really long time. Interestingly in some cases we put those managers in business in one case over 20 years ago we put a manager in business and it's still the largest part of our global equity portfolio. But in some ways and this might relate back to your beliefs from from being at protetége. I think that there can be less business risk earlier in a fund's life. No it really depends on the strategy. I think that can be really true in private equity where we tend to want to invest well we we love investing with folks that don't ever want to sell and we could have another conversation about that. It's hard to find those folks within the fund model. We like to be there for at least three funds and we'd prefer to be there for five, six, seven funds. It's much easier to do that if you invest in funds when they're small, when the alignment is high, when they can buy businesses more cheaply. If you're investing at fund five or six, when there's a really stable business, often the the life cycle on the strategy is just shorter. I think on the public side, it's a mixed bag. Hedge funds fail. So, you need to be really careful when you're investing early. I've made some mistakes in that regard investing early with folks where just frankly, their LPs didn't have the same time horizon that we did when thinking about giving managers the ability to figure themselves out. And that creates huge business instability. And I think for the manager forces them to think short term because whether they want to or not they're managing to quarterly returns. So I think it's very strategy dependent and one of my learnings has been if we're going to invest with a smaller newer fund on the long only side that we really need to make sure that there's not an asset liability mismatch that we know who the other partners are and that we really understand that the manager has the fortitude to stick with what they know which requires a lot more than just passion. As you do your homework on an early stage manager, is there much of a difference if it's a private equity manager or some form of a public equity manager in the work that you do and then the conviction that you can build that a past pattern of success is likely to repeat itself in a new organization? I think there is all I mean the work that we do while there's an overarching process to everything that we do. I think we're always trying to gather as much information from as many places as possible when we invest in newer managers. And we're often cobbling together some sort of a track record which can be different and more challenging I think sometimes on I would say it's more challenging actually on the public side. Usually if we're investing in a new private equity fund, there's often a strong pattern of or record of operating history and often they've been investing themselves in five, six, 10 deals. So you have the ability to and also the I don't know I found there's just a higher level of transparency often on the private side where managers can really really dive in and tell you exactly how they were adding value at companies. You can talk to the CEOs of the companies often because they're small businesses and they're willing to spend time with you. So, I think it's easier to reference check on the private side. On the public side, when someone's new, it's a bit of a struggle because often that person hasn't been a trigger puller. So, you're trying to make a bet on whether they can transition from being an analyst to being a portfolio manager. And often, I think the individual isn't aware of how hard that is. And I can even say that coming from the Sloan Foundation to Brandy Wine, I went from being a director where there was a CIO sitting on top and vetting all my decisions to being the person vetting decisions. And the weight that I bear because of that is remarkably different. And it took me a number of years to figure it out. I'm still figuring it out quite honestly. And it can be very distracting if you're not careful. So understanding how to lead an organization, build a portfolio, manage risk on the public side where you have the pressures of the market weighing on you day-to-day. I think and you also don't have locked up capital which private equity funds if you can raise a fund you know you've got 10 years or so to figure it out. I just think it's a lot harder on the public side. So on the public side now know there's a big wave of discussion and movement of capital towards passive strategies and certainly in the US large cap it's been very hard for anyone to know that you should have owned Google and Facebook and Amazon and if you didn't you're probably going to underperform the S&P. How do you think about active versus passive in the portfolios you're managing? >> It's interesting we just had a big discussion about to our families about this. We view passive investing. I have a very healthy respect for it and we view it as essentially our break even. So it's the hurdle for anything we do and I'm specifically talking about let's focus on long only investing first because I think in long only investing any retail investor knows that there is this taxefficient cheap way for them to invest their money and that is a market cap weighted index and that's a very sensible option for a lot of people. I don't think there's anything wrong with that and I think that has to be the benchmark for institutional investors as well when they think about managing money but especially when they're taxable because tax efficiency creates you know an additional 150 to 200 basis point annual hurdle for every active manager in the portfolio that's what you can lose through turnover and it can get worse than that it can also be better than that depending on the manager strategy so we actually model out a break even alpha for every active manager we invest in on the long side to understand what we have to believe they have to earn to be able to put them in the portfolio and we use passive indices in the portfolio and we acknowledge that when I think about active and passive investing and the team and I have done a lot of work on this I think we're at a cyclical low for active management and if you and that you can actually look back to the 70s and see these cycles of alpha I think a bunch of banks have done research on this often the negative alpha periods tend to be in momentum and growth periods when markets are kind of screaming upwards, which is what we've been in for the past number of years. But I also think that there's some structural challenges, you know, whether it's I know it was a while ago, but there's some reasons I think it matter today. Whether it's rag FD passing um in 2000 or the democratization of information or the fact that there's just more smart money in the space and there's a number of statistics you could look at to tell you that, you know, there's over 10,000 hedge funds, I think, now. And that's a market difference from 10 or 15 years ago. I think alpha is never going to be as high on a repeatable basis as it probably was in 2001, but we still believe in active management very much. I just think again it has to meet this hurdle of what we can get passively. So we think there's room for both in the portfolio. >> Is there anything in the markets today that you're you're really excited about? We actually are seeing more interesting opportunities than we have capital for on the private side because we are just starting to see a lot of interesting stuff pop up on the really small end of the market. So we just, you know, anchored a really small healthcare fund. It's someone's firsttime fund, but he has experience as an investor and operator. And I'm amazed at the value that he's finding in that space. But it's because he's so far below the institutional the typical institutional mark of five to 10 million in IBA and up. I mean he's really it's it's a micro strategy. So that's kind of fun. I'm excited about some more long lived opportunities that we're pursuing to buy and hold businesses for the long term. I think there's some structural challenges in the space, but it's it's such a wonderful opportunity for families to be able to compound their capital outside of the >> We were talking offline. Patrick Oshani and I are doing some work on this. He's calling permanent equity. >> Yes. >> And how there are really two models. Sometimes you see people buy businesses that generate cash and they dividend out that cash. Brent Bore does that. And then there are other models where people will create as you said sort of hold assets for the really long term with private equity but with no intention to sell. Have you looked at those opportunities and what are the challenges of investing in someone without a known potential exit date? >> We have looked at a number of these opportunities. We've looked at a lot more than we've said yes to which is somewhat disappointing and frustrating to me right now. But a lot of the challenge has been what you just framed, which is understanding the first of all the right way to compensate people when they're buying an asset and never selling it. So do you, you know, do you pay them a percent of carry or profits on, you know, sort of the asset value that they're building of the firm? How can you get comfortable with that? What does it look like in the outy years? And what does that mean for the partnership and what you're sharing with them? But I think another challenge is just finding folks where you really have the confidence that they have the longevity to do what they say they're going to do. If someone comes out of a private equity fund and says, "Oh, I'm so sick of that model. I hate raising funds every 3 years. I just want to find a great business and hold it forever." Well, do they have any credibility doing that? I think for some folks, you could get to know them and believe that they do. And for other folks, it's simply that they got tired of fundraising and they're probably going to go back, you know, in some form or another after giving up because it's really hard. You know, I think it's really hard to find a business and and for some folks, it can be boring, too. You know, they want to do deals and while you can have a buy and build strategy where you are doing deals, it's a little less frenetic than the typical private private equity fund. And it takes a certain constitution to be able to do that. So, I do think we're finding that we've actually seen this a couple of times now. We've met some really interesting folks. We've encouraged them to stay outside of the fund model and try to find a way to partner with us to just build and hold something longterm and then but we we aren't necessarily enough capital for them. Maybe um in some cases we are, but in some cases they want to raise a bigger pool of capital and they have a hard time finding other folks that are willing to commit for that long and they end up going back to the traditional fund model because it's just, you know, it's cookie cutter. It's set up for them already. >> But you talk about making mistakes. It's really hard to learn if you just kind of get everything right all the time. And especially as you came over here, you're in, as you said, in the chief investment officer seat for the first time. What are some of the mistakes generally that you made and how did you learn from them? >> Oh, I've made a lot of mistakes, but I think some of my standout mistakes, one, you know, one standout mistake that I made, which I've learned a lot from, was wearing my endowment hat into an office where I'm managing money for families. >> And what does that what does that mean? Again, it's back to this idea, and maybe I seem obsessed with this, but it's it's I've gotten religion over the past couple years. It's a different animal to manage money for taxable investors. And I think what we share with an endowment, and I have lots of great friends in the endowment world. I love that world. And our investment committee has endowment folks on it. It's a small committee, but we share the long time horizon. We share the focus on or the bias towards investing in people who do deep fundamental research who are heavily aligned with us in terms of being heavily invested in in their own strategies. But because we pay taxes, we have to think even longer term than an endowment. I would say we have to be even more conscious of turnover both at the fund level and at our portfolio level. And it also means there's some opportunities for us. Um, you know, there's some strategies that just make you we really love private equity as an asset class here. It's a wonderful asset for families. Also, it's a wonderful asset, not just from an investment perspective, but from an estate planning perspective. It has some wonderful benefits. You know, when I was at the Sloan Foundation, we wanted current income. That was fabulous for us. When you're paying out 5% every year and you don't have money coming in the top, current income strategies are a wonderful, wonderful thing. So, it's just you have to reframe everything you do. Maybe it's reframing at the margin, but I I wish I had had that religion sooner because I think I would have just asked better questions initially. So that's been a big learning. And finally, I think on the manager selection side, a big learning for me has been that passion has to be married with judgment. This sounds really obvious, but I was very very sucked in by passionate managers when I joined when I joined here and and passion and smarts. That was kind of what I was looking for, you know, just that brilliant person that is so committed to what they're doing. It's not enough. And I think some of the strategies I've come to appreciate the most aren't necessarily super sexy when you first look at them, but the person that's running the strategy has a huge amount of judgment. They understand what they know and what they don't know. They understand what they're good at. They hire appropriately for that. They understand risk. And that's not stuff that is super fun to talk about all the time, but I think it can often make for the best long-term investments. >> And is that something I always struggled in the process of interviewing managers how you test for judgment? I think when you have money with a manager, you see it over time. You see it play out and then you have either more or less conviction in the manager as a result. How do you think about trying to figure that out before you allocate money to someone? >> That's a great question and I think it can be really hard to do. I think a lot of it is just spending time with the manager and the team and asking, you know, I mean, really, really diving into, especially if it's a younger manager, how do you think about constructing your portfolio? Let's s let's run some scenarios by you. You know, this is what's happening in the markets right now. And sometimes you can use history. Let's talk exactly about what you did then or what you would do and really see how much they've thought through those decision points. It's much easier, of course, if a manager has a track record and you can look, you know, at their exposure management. You can look at the companies that they bought, at their position sizing, and understand how much thought was put into all of those decisions and walk them back through time and say, you know, when when you move to X or Y, one way or another, why were you doing it? And I think you do it enough and you get a sense for who's deliberate in their actions and for who's kind of putting a finger up in the air and and has more of a fly by the seat of their pants, I guess, approach to managing money. But I also think that and I this is sort of relating back to a very specific mistake that I made. there was a very bright manager who did really really you know pretty good work on the credits actually that that he or she purchased but he had he was completely off the reservation when it came to sizing his portfolio and it should have been a red flag and I think it was just like concentrated is better you know I I really want to sort of push the envelope here because I don't think you know at my last organization we didn't take enough concentration and that was a really big problem and I think it you know it led this person to not be able to manage the risk in their portfolio properly. And in hindsight, it was a very obvious thing, but I think especially when you're dealing with young managers, they need to put risk first. And I don't think I think it sounds sexier to to just say, I'm going to put the pedal to the metal in terms of wanting to earn the highest returns. So, that's something that we try to probe for. >> Yeah, there's an interesting parallel when you're talking about a manager in this case who has position sizing issues. um at some point in time they could grow and learn just as you're talking about the lessons that you learn and growing and learning in your process. How do you go about within your organization trying to improve how you learn, how you improve your process, how you make better decisions going forward? I think we are constantly trying to iterate and you know I shared with you an article that I had written a while ago which actually in sharing with you I realized I hadn't read it for a couple of years now but and and it was titled using design thinking to inform inform the investment process and and what does that actually mean design thinking is an alternative to the scientific method which is really based on iterative learning and it's based on you know sort of open-minded problem solving which means you need to create a culture where that's allowed. So, and it's easier said than done actually. I think it's very easy for people to get either very stuck in a process or very stuck in their own minds. So, and this is something I it's one of the main reasons that I keep the team really small here cuz we need to have complete trust amongst each other. We need to have the ability to say in fact this happened at a meeting last week. Um one of my team members said you know I don't like this. I feel like I'm fighting for an idea that I don't fully believe in yet because we have right now more opportunities than capital in this, you know, in our private equity asset class and it doesn't feel intellectually honest because I haven't totally bought into this idea. And then we stopped. This was in the middle of our team meeting and we said, okay, well, how can we, you know, what do we need to do to make our process better in this moment so that you don't feel that way? And we decided that we were going to, you know, set up a separate meeting, kind of not talk about it anymore where everyone on the team, we have a framework that we use essentially grades every opportunity according to this framework. Not so that we can stick with these grades, but because it forces a really intellectually honest discussion around all the managers in the portfolio. And it forces everyone on the team to have a voice and to have an opinion. But it has to be deliberate and it has to be minute-to-minute. And you need to have a team where people are willing to step up and say they've made mistakes, where people are willing to say that they feel uncomfortable about the way decisions are being made. And that's something that I fight for as a CIO every day. And I don't always get it right. But I think it's allowed for a lot of innovation and process improvement. And the same has been true with our investment committee where we were really struggling to find the right way to communicate with them because a lot of investment committees, I think we have a very small and very smart investment committee. It's four people now. It will never get bigger than that. And these are folks with a lot of wisdom to share. But a lot of investment committees at organizations like ours frankly exist to rubber stamp ideas. And it's very easy to get into that model because you meet with them quarterly and you're meeting with your team weekly. And it's hard to find the right balance. But we wanted to be able to use that, you know, to use our investment committee for their wisdom. and we realized we needed to engage them early in our process as opposed to late in their pro our process so they could help make sure that we were asking the right questions. >> I want to turn a little bit to something different in your life than many people in your seat. So your husband Scott is a hedge fund manager. What is dinner conversation like at your household? >> Well, this is maybe not the answer you want, but we try not to talk about work that much. I think we recognize that our worlds are very closely intertwined and there's a little bit of a danger, I think, to to making that too much a part of our dynamic. I, you know, Scott and I have we've been together 17 years. We're we're hitting on our 10-year anniversary this year of marriage. So, we've grown up together in many ways. But while we don't while our dinner table conversation doesn't focus on the investments in our portfolio, and in fact, Scott won't even tell me how they're doing usually until year end. Even though I have edited a letter or two for him, it's always with the numbers blocked out. I do think we've been helpful to each other in terms of thinking about various challenges that might have come up for each of us. And Scott in particular is he always keeps me really focused. you know, he's just he's incredibly disciplined. We have very different personalities. Not saying that I I'm not disciplined as well, but Scott kind of takes it to the next level in everything he does. He's very deliberate about everything he does. And he keeps me on my game. So, even when it came to getting this job, he said, you know, what are you going to do to to really stand out? And he's always asking me that and sort of asking me how I can up my game and keeping me honest. And I really appreciated that. And I think the fact that he is in this business and he's built his business from scratch gives me a little bit of perspective on what it means to build a fund and the time horizon you need to give managers. You know, they've done great over a long period of time, but it's never easy, you know, those first couple years when you just don't know if your business is going to be there over time. So, seeing him manage through that, I think quite elegantly has given me some perspective and patience. the great cliche that it's lonely at the top and you've had the experience you talked about being mentored by Bill Peterson. You have this wonderful investment committee but also throughout the last 15 years you've been involved in trying to engage a community of allocators at different points in your life. Why don't you talk a little bit about the importance of mentorship of developing a community of peers and how that how you've been involved in it? >> Well, I agree with you. I think one of the hardest things when I came into this role as CIO was feeling all of a sudden like I a big portion of my peer group that I had known was relating to me a little bit differently and I couldn't ask some of the same questions I had. I think what initially happened for me in this space was I came to work at the Sloan Foundation. I'm relatively shy and I would show up at annual meetings and sort of beline to the food table and then not really know who to talk to. And I I hated the cocktail hour. I found it very stressful, but every once in a while I'd meet one or two people that were pretty fabulous and maybe also they didn't love the cocktail hour either. And we'd end up getting into a pretty deep conversation um at these meetings. And little by little I was collecting business cards with people that I really admired and liked and wanted to develop deeper relationships with. And I said, you know, maybe there's room for all of us to kind of get together and have some sort of an informal community. So in 2008, I emailed about 13 people, I think, and said, you know, do you guys want to form sort of an informal network? I don't really know what this is going to turn into, but it could just be an email list. I knew it actually already existed at the CIO level, but it it didn't exist at that time at kind of the younger director level. And it turned out that there were a lot of people that felt like me at these meetings. And that group has now grown to, you know, healthfully over a hundred people. Initially, I really didn't want it to get that big, but I think the value of the group has changed and evolved over time. And what it is now is this wonderful group of people that exists across the nation in family offices, endowments, and foundations that know that they have this set that they can reach out to when they might have a question. And more than that, you know, we host events once or twice a year. People develop subgroups of people that they really like and it's just a way for them to connect with people. And I think the mentorship for me has existed beyond that much more on a personal level. Both trying to mentor my team and also being reminded of the fact that the reason I ended up getting the job at the Sloan Foundation in the first place is because a mentor of mine from Stanford put in a good word for me. So I try to be as willing as I can to have conversations with young folks who are interested in this business while also being mindful of my time. It's always a balancing act. Well, let's turn to a couple of closing questions as I like to do in these. Uh, we'll start with what is your favorite thing to do that is a complete waste of time. >> Um, my favorite thing to do that is in some ways a complete waste of time is probably doing art with my daughter Kira. Uh, we actually spent Mother's Day, >> the sweetest non-waste of time I think I've heard on any of these podcasts. Um we we spent Mother's Day uh with sidewalk chalk, you know, just make creating beauty in in a little park by our house and it was so joyful for both of us. And you're right, it isn't a waste of time because it's tremendous quality time with her and it also engages another part of my brain. Um it's the wonderful thing about having kids is that they remind you that there's beauty in the world in ways that you forget to see every day. As I'm saying this, it isn't a waste of time at all. I also like watching billions, I guess. So maybe that's a >> No, that's closer. That's closer. What How about a favorite book? >> Oh my goodness. I have so many. So, one book that I Well, I'm I'm going to give you a couple answers. I can't give just one. I love reading the biographies of great entrepreneurs. So, I've now made my way through Steve Jobs, Elon Musk. Maybe some would argue he's great, some wouldn't, but I think there's some pretty fabulous things about him. Jeff Bezos, you name it. Now I'm reading Phil Knight's book. so good. >> It's great. And it's just it's wonderful to read a bunch of them in sequence and understand the parallels between them and the differences. Beyond that, there's this book called Beyond the Beautiful Forevers that was written by an incredible journalist from the Washington Post who spent seven years living in a slum in India and it's beautifully written and it doesn't trivialize poverty and I didn't realize I was reading a non-fiction book until I was done with it and I just think it's it's a remarkable feat. How about your favorite sports moment either as a participant or a fan? >> It actually happened earlier this year. I've been a big skier since I was three years old. I grew up in Colorado and I had the opportunity to go to a place called Baldface Mountain and uh go backountry skiing for the first time with a group of outstanding skiers. I I had no business being there. These were, you know, skiers at all. There were some former Olympians, there were some current Olympians, lots of folks that had been on, you know, I was on a kind of a competitive ski team in high school, but these were serious competitors. And it was just so thrilling. It was thrilling. >> That's fantastic. What do you know now that you wish you knew 10 years ago? >> What I know now that I wish I knew 10 years ago is the importance of building quality into your life. I think I used to believe in multitasking. I used to believe that I wanted to have lots and lots of stuff in my life filling my time. Or I just did. Maybe I didn't want to, but I just my life was was full, but it was not particularly intentional. And with every year, I try to get more intentional about how I spend my time. I try to do less. My team would probably tell you I'm still not good enough about doing less. But it's something I'm actively working on. And I hope in another 10 years I will have just honed my life into a few things that I love and do really really well. That's sort of what I'm aiming at. >> And one last question. Uh it is your waning days in life. You're about 120 years old now sitting in your rocking chair. What advice would you give yourself today? I imagine that I will tell myself to appreciate the the joy that exists in small moments, to cherish every moment I have with my children, to love the work that I do because it's time away for my kids, so it's not worth doing if I'm not loving it, and to just to live richly. >> Fabulous, Jenny. Thank you so much for the time. >> Thank you. >> Thanks for listening to the show. To learn more, hop on our website at capitalallocators.com where you can join our mailing list, access past shows, learn about our gatherings, and sign up for premium content, including podcast transcripts, my investment portfolio, and a lot more. Have a good one, and see you next time.
CIO Greatest Hits: Multi-Family Offices – Jenny Heller (Brandywine Trust Group, 2017)
Summary
Transcript
[Music] Hello, I'm Ted Sides and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation through conversations with the leaders in the money game. We learn how these holders of the keys to the kingdom allocate their time and their capital. You can join our mailing list and access premium content at capitalallocators.com. >> All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is forformational purposes only and should not be relied upon as a basis for investment decisions. Clients of Capital Allocators or podcast guests may maintain positions in securities discussed on this podcast. With eight years and over 500 podcasts under my belt, I'm often asked to recommend my favorite episode. But I can't really answer that question. I feel like I have 500 children and don't think I've disowned a single one. So when asked, I usually offer up a great recent episode to get a listener started. Finding the best episodes in a big library of content isn't easy, so we thought we'd help. Each summer going forward, we're going to share our best. Over 7 weeks, we'll replay conversations curated from our favorites and yours, excluding those from the last 12 months. Our 2025 summer series focuses on CIOS. We're blessed to have an incredible library of long shelf life content, and we just couldn't pick seven. Instead, we'll share a dozen gems canvasing every type of institutional asset owner. This week's summer series is a multifamily office twofer with Stan Miranda, co-founder and chairman emeritus of Partners Capital and Jenny Heler from Brandywine. Both firms started as multif family offices that have evolved in different ways. Partners Capital has grown and scaled as a leading OCIO, while Brandywine has remained a boutique with a fixed set of family clients. Before we get to the interview, a quick announcement. We've set new dates for our capital allocators university for investor relations and business development professionals. Those dates are December 3rd and 4th in New York City. Later in the year is just a better time of year for this gathering. It's post AGM season. When travel starts to wind down, it's right before the holiday crunch time and it's a great time for capital raisers to reflect on their previous year and plan for the year ahead. December 3rd and 4th in New York City. Cau for IRBD is a closed dooror gathering for capital raisers to connect with peers, learn from allocators and other experts, and really share in best practices with each other. You can learn more at capitaloc.com/un university. Thanks so much for spreading the word about Capital Allocators University for investor relations and business development professionals. Please enjoy my conversations with Stan Miranda from 2023 and Jenny Heler from episode 7 back in 2017 and a follow-up in 2021. >> Jenny, thanks for joining me. >> Thank you so much, Ted. >> So, it's really fun starting just at the beginning. How did you first get interested in investing? Well, I'm not one of those people that has been interested in investing since middle school or grade school. My dad is a doctor, my mom is a attorney and an art historian. And when I got my first job at Meil Lynch in investment banking, they both thought I was going to be a stock broker. And the reason I ended up there quite honestly is because I developed a little bit of an interest in micro finance in college. I spent a semester in South Africa and I was a liberal arts political economy major and I knew that I knew nothing about what a balance sheet was or an income statement was and I needed to get some training. So that's how I started in banking and even then I wasn't sure where I was going to go but I I learned a little bit about the endowment world when I was there and >> from investment banking >> from investment banking and it was largely sort of a post 911 crisis moment when I said this is not what I want to be doing with my life. Uh but I I enjoyed the analytical side of the job. I really didn't like selling uh and I wasn't good at it frankly. So, I was searching around, you know, uh, my college website, seeing what jobs were open. I saw a job at the Stanford Endowment and I said, "Wow, this is a really cool intersection of finance and kind of the nonprofit world, which I wanted to move back towards and I begged them for eight months to give me a job until they finally >> So, circle back for a second. What was that micro finance like? How did you first get interested in it? And what was the experience like? I spent a so when a lot of my friends were going to Europe in college to do their semester abroad, I decided I wanted to go to South Africa. I don't know what drew me there. I think uh I traveled a lot as a kid with my parents to developing economies and I really had a love for it and I knew that there would be something there to learn as a political economy major four years post aparttheid. It just seemed like a a really interesting time to be there. And when I was there, I was in a program that was very focused on experiential learning and very focused on sort of letting us find our path in terms of what we were interested in. And I connected with an economics professor that gave me Muhammad Ununice's book. Muhammad Ununus is a guy that founded the Gine Bank. And I read his book and it just sort of opened my eyes. Of course, here I am now working, you know, running a family office. So clearly my my life has taken some twists and turns, but it it just really excited me. >> And so was there a moment or an insight you had in that experience in South Africa that stayed with you till today? >> Oh my goodness, that's a great question. I think well it's interesting. I've I've now spent time a little bit of time living in two countries very very different from the US. So I spent that period of time in South Africa and I also spent six months living in India prior to business school working for an NGO trying to scratch my micro finance itch and I think some learnings have coming have come out of both of those experiences. One that you have to have a lot of patience for the time and the pace in which things move in other countries. you often have to slow yourself down a lot largely because especially at the times I was I was there you know these economies were a lot less efficient and you know in India for example getting a package to my parents mailed meant spending an hour at the post office watching someone tie up the package with strings and it could be incredibly infuriating but I think there's a lot of value to slowing down and learning to take your time and allowing that time allowing yourself I guess the time and the space to open up and really absorb a culture. There's just such tremendous value in that. It's something I want to offer my kids. >> We'll get to families a little later, I think. So, we'll come back. You you landed at Stanford Endowment and what year was that? >> That was in 2002. >> Pretty early on in people understanding sort of endowments today are in the newspaper every year for their performance, but that was that was a lot before that. And who was was that under John Powers? >> Under Mike McCaffrey. >> Oh, right. Under Mike. Okay. >> Yeah. >> And what was your experience like? >> It was incredible. I It was just It was quite frankly a huge relief coming from the banking world. I had the pleasure of being at the Stanford Management Company at a time when there was just a lot going on. Mike was a pretty new CIO. I was working for a portion of the endowment that had been a little bit undermanaged historically. It was 11 different school and department funds. the sort of mini endowments that all of the schools there had and you know they had an incredible amount of assets because we just been through sort of the tech runup and then the tech collapse but there was still a lot of value that had been created during that period but no one had ever really looked closely at those assets. So it was my job as an analyst or associate I guess they called me at the time to try to make some sense of that and you know put information together in a way that would be usable for folks which ended up being an incredible training across asset classes because these these assets were so diverse but it was also just a really exciting time to be working for the endowment because the team was quite new. There was a lot of energy. There were a lot of folks that had actually come from the banking world there. So I think there was a really high high level of sort of discipline and work ethic there but also a lot of freedom to kind of figure things out. So I just I fell in love with the work and I also this was on the advice of my husband I tend to romanticize jobs and he always would say you know pay attention to what the senior people are doing every day and is that work that you think you love. And the truth was I loved the work that the senior people were doing. you know, I'd get to sit in on weekly meetings with them and I loved the breadth of the work. I loved that they were meeting with really really smart people all the time. Um, and I loved that they were having a tangible impact. So, it was fun. >> And how long did you stay? >> I stayed there. So, it was it was structured as sort of a pre-business school experience. I was supposed to stay there 2 years. I ended up sort of compromising with my boss at the time to stay 2 and 1/2 years and then spend 6 months in India. um before business school so I could make sure that I understood what path I wanted to go down post business school because I I sort of view that period in anyone's life as a freebie period where you can take a lot of risk postgraduate school you have to kind of start to focus a little more on what you want your career to look like >> and so when you were go it sounds like you had a passion for this work before you went to school what happened at school was there anything that came up that made you think huh maybe I should try something else or did you just continue down that path path with with great to your experience. >> Well, it seemed so boring to me that I would keep doing the same thing I'd done before school. I just never thought I'd be one of those people. The time I spent in India taught me that I did not want to go into the full sort of nonprofit micro finance world. >> Talk about that a little more. What happened that changed that thought process? >> Well, I was working for, you know, a really interesting NGO there that had a big micro finance arm and a public private partnership arm. It was very well funded by the World Bank. It it seemed like sort of the perfect institution to really explore that passion. And I I frankly found the work incredibly frustrating. And it it was frustrating probably because I came in with a degree of arrogance about what I could bring to an organization that I knew nothing about. There was no reason they needed me there quite frankly. But the pace at which they moved was not only slow, but I I think I was frustrated because the institution was more focused on getting grants from the World Bank than they were on making a difference. I think they wanted to make a difference in people's lives, but they didn't always know how. And so so much of the program ended up being oriented around earning the next grant that there wasn't enough focus sometimes on just the blocking and tackling that was involved in trying to make very poor women's lives better. And I think there's some things the organization did very well. But you know as an outsider looking in there are times when you come into a new place and you see things that seem glaringly obvious. They were involved in some public private partnerships for example that were actually losing money for the people that they were trying to support but they looked really good on paper. It looked really good to say you had a partnership with ex large agriculture firm or ex retailer. So I think I was a little disillusioned by that. I also think frankly in India at the time talent wasn't rushing towards the nonprofit sector. It just that's a luxury. It's a luxury to be able to work in a nonprofit to a degree. But you know I think when you're when you're in a really fast growing economy talent wants to rush towards technology. They want to rush towards finance. So so there was a bit of a talent gap in the sector and smaller organizations were figuring it out and filling it. But bigger organizations I don't think we're doing such a good job. Secondarily I realized I didn't want to live in I think the best work is being done on the ground in a lot of developing countries when it comes to not just micro finance but any sustainable development work. and my friends and my family and my husband are all here and that's very practical. It was a question someone asked me when I was applying to business school if I was realistic about my goals and I wasn't realistic. I I the truth is I I love being an American. >> Yeah. Well, there's some definite benefits of being an American. Just to to dive a little deeper on the first part of that, do you think that the experience you had was pervasive across other NOS and other nonprofits at the time or was it specific to the one you were working for? >> I found some remarkable nonprofits when I was in India and I thought a couple of times about switching over to a smaller organization that I thought was doing just had better metrics for measuring themselves. You know, what gets measured gets managed. But I was only there for six months and I felt I'd made a commitment to this organization and I needed to give it its fair shake. It just didn't seem right to kind of jump ship after two months. Even if they didn't need me, I just felt I'd made a commitment to them. But there were some incredible small organizations and I don't want to be hard on on the world of NOS's and nonprofits. I think there's a lot of amazing organizations out there. I just think my experience with this particular organization and specifically sort of the unit I was working in within this specific organization was disappointing relative to my very lofty expectations. Yeah. So, >> you know, there's one other little thread that is kind of interesting. So, you were at the Sanford Endowment just after the bubble had popped. >> Yes. >> And so, you're probably aware of all these then.com companies that were building traffic, losing money so that somewhere down the road they'd have an audience and presumably could sell a product. the pets.com aren't here anymore. So, most of them didn't work. Was there any chance that the organization you were working for was making these sort of higher profile presumably with multinational partnerships to build their brand so that they could do something better with it in the future. It sounded the way you were saying it a little more like you're not sure the business plan was was along those lines. You know, I think it's an interesting question and there can be value to brand building in any organization and maybe at times you do that at the expense of the bottom line, whatever that bottom line looks like. I frankly am not sure that well a couple of things. One, I think sometimes the best and I feel a little silly talking about this given where I work and given that it's not my expertise, but outside looking in, I wonder if sometimes the best nonprofit ideas aren't easily scalable. Paul Farmer talks about this a bit and it's well at least in Mountains Beyond Mountains the book that was written about him. You know he had this incredible way to bring health care to the developing world but the scalability piece was the reason he didn't get funded for a long time and yet his outcomes were phenomenal. So I think figuring out how to scale a nonprofit is an incredible challenge. This organization was doing some things incredibly well that worked at scale. They had built a movement of women in who really didn't have a voice in rural India and that was powerful and I think there did matter but I think their issue was that they weren't focused anymore. Um so they had they built this movement and they gave women a voice and they organized women which was a powerful thing at the time and then they built a micro finance bank which was very successful and then they started building all these ancillary vehicles which were kind of not so successful and I think they were building on their brand to do that but I don't think anyone was kind of taking a step back and saying what should we focus on and maybe we can put all of our brand equity and our energy into the one or two things we do really really well and let other folks try to solve these other problems. >> Yeah. Some great business lessons right there >> for sure. >> So, we leave business school and where did you end up? >> I ended up at the Alfred Peaceloan Foundation in New York >> with Bill Peterson. >> With Bill Peterson, who is amazing and to this day is one of the best mentors I've ever had and remains a very close friend. >> And what is it? What was it about Bill and mentorship that you learned from him in this business? Well, for anyone that's listening that knows Bill, he is honest, maybe to a fault. He has one of the most active minds I've ever seen. He never stops thinking. He never stops questioning. He He viewed himself as the chief cynic and could get to the heart of what mattered in like 30 seconds or less. He's deeply passionate about investing and he was, you know, deeply passionate about the institution he worked for. He really built that endowment for 16 years. I hope I have that time period right, Bill, if you're listening to this. And he he's someone that taught me by doing and by acting. You know, he wouldn't he wasn't one to sort of sit down and have lengthy conversations with me about the meaning and of life. He would show me how to invest just by being actively engaged in every aspect of our portfolio, asking really hard questions of me and of our managers and just being up for any type of discussion on investing. And I think it was a powerful way to he would always tell me that he enjoyed mentoring more than managing, but I think that's what he needed to do. and he, you know, it's a statement that everyone that's left the Sloan Foundation has ended up in really interesting spots, I think, because because of Bill's teaching. >> Yeah, I know. It's something he's very proud of. I've talked to him about that. >> And how long did you stay? >> Uh, I was there about 5 years. >> And what different roles did you play? I know it's it's a small team. >> It was it's it was a very small team, remains a small team, but when I started, it was me, Bill, and Joe Borer. So, there were three of us managing the portfolio. I was one of two directors and had the least experience by far. Uh both Bill and Joe had been working together for a long time. Both very experienced investors. I came in right out of business school and I think they were willing to take a chance on me because it seems like I've top ticked a lot of places I've worked. I I went there just before the global financial crisis. It ended up being this incredibly exciting period there because I got to be the new opportunities person by default. We were all generalists, but Bill and Joe had built this portfolio and then had to see it through a period of crisis, which they did remarkably well, but I had the benefit of and I mean, everything we did was team-based, but the fact that I hadn't been there when the investments are made, I think just allowed me to kind of step out and troll around for new stuff. And, you know, Bill gave me the the freedom to do that. So I ended up getting to spend some time, you know, looking at the structured credit market and mortgage back securities and all the things that, you know, had blown up all of a sudden became incredible opportunities for investment. So that that was the investment side. And in terms of other roles, I think there you know as a group having some fresh blood allowed us to build more process. We hired our first associate. So there was that was really you know an early experience for me in managing someone very bright who was a little bit younger than I was but not that much younger. So that was a piece of it too. >> And h how did you decide to leave? I I found myself I was getting a couple of calls from recruiters after a couple years and I at some point I started picking up the phone and I started listening to what they had to say and occasionally when opportunities sounded interesting and there were a few things I looked at over the years I found myself interviewing and taking myself relatively far down certain processes and I was a little concerned with why I was doing that and I called a mentor of mine from from graduate school and I said can I talk to you about this. You know, I I said, I I'm thinking about this opportunity. What should I do? And he said to me, you know, this is the second time you've called me about an opportunity you're thinking about. I think the bigger question is why you're interviewing, not whether this is the right opportunity or not. And this was not Brandy Wine at the moment, but he said, either you're going to be one of these people that wants to jump around a lot in life. That's okay. Or maybe you're getting a little bored and maybe you've hit a certain plateau in your learning and you're ready for another leap. And I sat with that for another year or two. And when I got the call about Brandy Wine, it it scared the heck out of me. >> It really >> always a good sign. >> It was a great sign. It it seemed like a leap. So that was the first, you know, the first thing was understanding that I was walking towards something that scared me, which I think is something you always have to do in your life, even though it never feels particularly good in the moment. And then I got to know a lot more about the organization and the governance and the families and the just the investment opportunity here. and it was like this is a no-brainer. I mean, it it's one of these once in a-lifetime opportunities to build something at a place that that has this incredible track record in history. >> So, let's frame where you're sitting today. So, you took the helm at Brandy Wine Trust Group and today you're the chief investment officer for a small group of families with a lot of money. How do you think about or how do you frame the challenge of taking a large pool of money and putting it to work in the markets? Well, I think some of the thinking was done for me before I got here. So, to just give a little bit of background on how we're structured, you know, we we manage money for a handful of families, a smaller group of them own the management company and are still the bulk of the assets. So, in many ways, we feel more like a single family office. And what the families have in common, they all have a very, very long time horizon. they're all able to take a high degree of ili liquidity risk, take a 10 or 20 year view or even longer in many cases when they think about the markets. And I think the, you know, we sort of view ourselves as having a fiduciary and an investment challenge that need to be married together. So the reason that Brandy Wine started as a trust company and it was a very deliberate action by the four founding families 25 years ago is they thought it would be the best way to manage their assets long-term to ensure that they had a multi-generational approach to managing their wealth. It it gives us very clear fiduciary goals and make sure that everyone is on the same page. And then on the investment side, for the most part, we manage our assets through pooling. And that again means that everyone's getting access to the same opportunities. And it allows my team and I to spend all of our time focusing on optimizing these pools. It doesn't mean that families don't have some assets sitting outside of the pools because that's the nature of families. There's always going to be stuff that they that they have that is unique to them. But we're spending a lot of our time and energy on thinking about the best way to invest a global equity portfolio broadly for taxable investors or a we'll call it a hedge fund portfolio. I know that's a silly thing because hedge funds aren't really an asset class, but a diversifying portfolio in the marketable space. The best way to create a private equity program for families. So, it simplifies my life. I don't have to find a manager and say, "No, who which family does this fit with?" It's just let's find the best managers we can and put them together into in a way that makes sense and offer our families kind of a sample asset allocation that makes sense for a very long-term investor and different family members are going to have higher or lower risk tolerances. Our trust company in Delaware spends a lot of time working with our families on that. But we also encourage and I think our families naturally think about themselves in aggregate. So when you when you roll all their assets together, what does it sort of look like? Does it make sense? Are the right assets sitting at the right level? I don't know if I really answered your question there. >> Yeah. No, that's a that's a good start. So, let's talk a little bit about what you believe about investing and the process of investing and as a starting point to dive in a little bit deeper on how you go about managing these pools. >> So, I think they're slightly different per pool, but the overarching framework is that everything we do is with an incredibly longterm time horizon. So, we're not thinking about monthly volatility, for example, or even quarterly returns when we're investing in a manager. So how does that translate into because these managers have clients that might be thinking shorter term than that. So how does it translate into how you go about either looking for certain managers or the research you do or the decisions that you make? >> Sure. So you know we have a framework that we use that actually permeates everything we do in many respects that where we really focus first on what a manager's process is, what their strategy is and then what their team and culture is. And those are really, you know, in many ways sort of there's a lot of touchyfey qualitative stuff going on in there. Trying to figure out whether a manager has a competitive advantage in what they do relative to what is often a very efficient market. That's a piece of it. And then thinking about the complexity of what we what they do. Is it something that we can really understand? Is it something that they understand? It's shocking. I think sometimes managers use a lot of jargon when they talk about what they do. And when you ask really basic questions, even they have a hard time explaining it sometimes. And then understanding whether they've built a firm and a team that marries with their process. So there's no one right way to build a firm or a team or a culture even, but it really has to marry with what they're trying to achieve. And then we back that up with looking at what we call their quality of returns. So rather than just saying, have they performed well, it's trying to really disagregate their returns and understand how they've made money. Has that changed over time? Is the way they've m they're making money, does it marry with what they say their processes and what they say they're doing? And do we think that it's repeatable? You know, there are point in time strategies. We tend to be less drawn to those than strategies that we think are durable over multi-deades hopefully understanding that organizations change. But I think that marries with another core reality that we have is that we are managing taxable money. And that means that the cost of wrong decisions is really high because if we redeem from a manager, we're often reinvesting a 75 or 80 cent dollar. So that means that the next manager has to be that much better. >> 75 or 80 cent dollar because of taxes or >> Yeah. Because we all of a sudden you're locking in realized gains and especially if you've had a manager in a portfolio for a long time. the our average hold for a manager is over 11 years. We try to keep our turnover very low and you know I think that gives us some really the ability to form partnerships really with managers but but we also recognize when we're going in that the cost of that decision is going to get higher and higher with every year that we're invested because hopefully the manager compounds makes a lot of money for us but but then to to move on to something else there's a tax cost to that beyond a reputational cost. So does the the necessity going in, not the necessity, the desire going in to have a really long investment horizon, does that translate into you're looking for a certain type of existing stability in a manager from the get-go? So maybe they're a little bit larger in size because you don't have to worry that that there's business risk as one example. >> I would say in some ways the opposite is true. We do we have some managers in our portfolio for sure that have been in existence a really long time. Interestingly in some cases we put those managers in business in one case over 20 years ago we put a manager in business and it's still the largest part of our global equity portfolio. But in some ways and this might relate back to your beliefs from from being at protetége. I think that there can be less business risk earlier in a fund's life. No it really depends on the strategy. I think that can be really true in private equity where we tend to want to invest well we we love investing with folks that don't ever want to sell and we could have another conversation about that. It's hard to find those folks within the fund model. We like to be there for at least three funds and we'd prefer to be there for five, six, seven funds. It's much easier to do that if you invest in funds when they're small, when the alignment is high, when they can buy businesses more cheaply. If you're investing at fund five or six, when there's a really stable business, often the the life cycle on the strategy is just shorter. I think on the public side, it's a mixed bag. Hedge funds fail. So, you need to be really careful when you're investing early. I've made some mistakes in that regard investing early with folks where just frankly, their LPs didn't have the same time horizon that we did when thinking about giving managers the ability to figure themselves out. And that creates huge business instability. And I think for the manager forces them to think short term because whether they want to or not they're managing to quarterly returns. So I think it's very strategy dependent and one of my learnings has been if we're going to invest with a smaller newer fund on the long only side that we really need to make sure that there's not an asset liability mismatch that we know who the other partners are and that we really understand that the manager has the fortitude to stick with what they know which requires a lot more than just passion. As you do your homework on an early stage manager, is there much of a difference if it's a private equity manager or some form of a public equity manager in the work that you do and then the conviction that you can build that a past pattern of success is likely to repeat itself in a new organization? I think there is all I mean the work that we do while there's an overarching process to everything that we do. I think we're always trying to gather as much information from as many places as possible when we invest in newer managers. And we're often cobbling together some sort of a track record which can be different and more challenging I think sometimes on I would say it's more challenging actually on the public side. Usually if we're investing in a new private equity fund, there's often a strong pattern of or record of operating history and often they've been investing themselves in five, six, 10 deals. So you have the ability to and also the I don't know I found there's just a higher level of transparency often on the private side where managers can really really dive in and tell you exactly how they were adding value at companies. You can talk to the CEOs of the companies often because they're small businesses and they're willing to spend time with you. So, I think it's easier to reference check on the private side. On the public side, when someone's new, it's a bit of a struggle because often that person hasn't been a trigger puller. So, you're trying to make a bet on whether they can transition from being an analyst to being a portfolio manager. And often, I think the individual isn't aware of how hard that is. And I can even say that coming from the Sloan Foundation to Brandy Wine, I went from being a director where there was a CIO sitting on top and vetting all my decisions to being the person vetting decisions. And the weight that I bear because of that is remarkably different. And it took me a number of years to figure it out. I'm still figuring it out quite honestly. And it can be very distracting if you're not careful. So understanding how to lead an organization, build a portfolio, manage risk on the public side where you have the pressures of the market weighing on you day-to-day. I think and you also don't have locked up capital which private equity funds if you can raise a fund you know you've got 10 years or so to figure it out. I just think it's a lot harder on the public side. So on the public side now know there's a big wave of discussion and movement of capital towards passive strategies and certainly in the US large cap it's been very hard for anyone to know that you should have owned Google and Facebook and Amazon and if you didn't you're probably going to underperform the S&P. How do you think about active versus passive in the portfolios you're managing? >> It's interesting we just had a big discussion about to our families about this. We view passive investing. I have a very healthy respect for it and we view it as essentially our break even. So it's the hurdle for anything we do and I'm specifically talking about let's focus on long only investing first because I think in long only investing any retail investor knows that there is this taxefficient cheap way for them to invest their money and that is a market cap weighted index and that's a very sensible option for a lot of people. I don't think there's anything wrong with that and I think that has to be the benchmark for institutional investors as well when they think about managing money but especially when they're taxable because tax efficiency creates you know an additional 150 to 200 basis point annual hurdle for every active manager in the portfolio that's what you can lose through turnover and it can get worse than that it can also be better than that depending on the manager strategy so we actually model out a break even alpha for every active manager we invest in on the long side to understand what we have to believe they have to earn to be able to put them in the portfolio and we use passive indices in the portfolio and we acknowledge that when I think about active and passive investing and the team and I have done a lot of work on this I think we're at a cyclical low for active management and if you and that you can actually look back to the 70s and see these cycles of alpha I think a bunch of banks have done research on this often the negative alpha periods tend to be in momentum and growth periods when markets are kind of screaming upwards, which is what we've been in for the past number of years. But I also think that there's some structural challenges, you know, whether it's I know it was a while ago, but there's some reasons I think it matter today. Whether it's rag FD passing um in 2000 or the democratization of information or the fact that there's just more smart money in the space and there's a number of statistics you could look at to tell you that, you know, there's over 10,000 hedge funds, I think, now. And that's a market difference from 10 or 15 years ago. I think alpha is never going to be as high on a repeatable basis as it probably was in 2001, but we still believe in active management very much. I just think again it has to meet this hurdle of what we can get passively. So we think there's room for both in the portfolio. >> Is there anything in the markets today that you're you're really excited about? We actually are seeing more interesting opportunities than we have capital for on the private side because we are just starting to see a lot of interesting stuff pop up on the really small end of the market. So we just, you know, anchored a really small healthcare fund. It's someone's firsttime fund, but he has experience as an investor and operator. And I'm amazed at the value that he's finding in that space. But it's because he's so far below the institutional the typical institutional mark of five to 10 million in IBA and up. I mean he's really it's it's a micro strategy. So that's kind of fun. I'm excited about some more long lived opportunities that we're pursuing to buy and hold businesses for the long term. I think there's some structural challenges in the space, but it's it's such a wonderful opportunity for families to be able to compound their capital outside of the >> We were talking offline. Patrick Oshani and I are doing some work on this. He's calling permanent equity. >> Yes. >> And how there are really two models. Sometimes you see people buy businesses that generate cash and they dividend out that cash. Brent Bore does that. And then there are other models where people will create as you said sort of hold assets for the really long term with private equity but with no intention to sell. Have you looked at those opportunities and what are the challenges of investing in someone without a known potential exit date? >> We have looked at a number of these opportunities. We've looked at a lot more than we've said yes to which is somewhat disappointing and frustrating to me right now. But a lot of the challenge has been what you just framed, which is understanding the first of all the right way to compensate people when they're buying an asset and never selling it. So do you, you know, do you pay them a percent of carry or profits on, you know, sort of the asset value that they're building of the firm? How can you get comfortable with that? What does it look like in the outy years? And what does that mean for the partnership and what you're sharing with them? But I think another challenge is just finding folks where you really have the confidence that they have the longevity to do what they say they're going to do. If someone comes out of a private equity fund and says, "Oh, I'm so sick of that model. I hate raising funds every 3 years. I just want to find a great business and hold it forever." Well, do they have any credibility doing that? I think for some folks, you could get to know them and believe that they do. And for other folks, it's simply that they got tired of fundraising and they're probably going to go back, you know, in some form or another after giving up because it's really hard. You know, I think it's really hard to find a business and and for some folks, it can be boring, too. You know, they want to do deals and while you can have a buy and build strategy where you are doing deals, it's a little less frenetic than the typical private private equity fund. And it takes a certain constitution to be able to do that. So, I do think we're finding that we've actually seen this a couple of times now. We've met some really interesting folks. We've encouraged them to stay outside of the fund model and try to find a way to partner with us to just build and hold something longterm and then but we we aren't necessarily enough capital for them. Maybe um in some cases we are, but in some cases they want to raise a bigger pool of capital and they have a hard time finding other folks that are willing to commit for that long and they end up going back to the traditional fund model because it's just, you know, it's cookie cutter. It's set up for them already. >> But you talk about making mistakes. It's really hard to learn if you just kind of get everything right all the time. And especially as you came over here, you're in, as you said, in the chief investment officer seat for the first time. What are some of the mistakes generally that you made and how did you learn from them? >> Oh, I've made a lot of mistakes, but I think some of my standout mistakes, one, you know, one standout mistake that I made, which I've learned a lot from, was wearing my endowment hat into an office where I'm managing money for families. >> And what does that what does that mean? Again, it's back to this idea, and maybe I seem obsessed with this, but it's it's I've gotten religion over the past couple years. It's a different animal to manage money for taxable investors. And I think what we share with an endowment, and I have lots of great friends in the endowment world. I love that world. And our investment committee has endowment folks on it. It's a small committee, but we share the long time horizon. We share the focus on or the bias towards investing in people who do deep fundamental research who are heavily aligned with us in terms of being heavily invested in in their own strategies. But because we pay taxes, we have to think even longer term than an endowment. I would say we have to be even more conscious of turnover both at the fund level and at our portfolio level. And it also means there's some opportunities for us. Um, you know, there's some strategies that just make you we really love private equity as an asset class here. It's a wonderful asset for families. Also, it's a wonderful asset, not just from an investment perspective, but from an estate planning perspective. It has some wonderful benefits. You know, when I was at the Sloan Foundation, we wanted current income. That was fabulous for us. When you're paying out 5% every year and you don't have money coming in the top, current income strategies are a wonderful, wonderful thing. So, it's just you have to reframe everything you do. Maybe it's reframing at the margin, but I I wish I had had that religion sooner because I think I would have just asked better questions initially. So that's been a big learning. And finally, I think on the manager selection side, a big learning for me has been that passion has to be married with judgment. This sounds really obvious, but I was very very sucked in by passionate managers when I joined when I joined here and and passion and smarts. That was kind of what I was looking for, you know, just that brilliant person that is so committed to what they're doing. It's not enough. And I think some of the strategies I've come to appreciate the most aren't necessarily super sexy when you first look at them, but the person that's running the strategy has a huge amount of judgment. They understand what they know and what they don't know. They understand what they're good at. They hire appropriately for that. They understand risk. And that's not stuff that is super fun to talk about all the time, but I think it can often make for the best long-term investments. >> And is that something I always struggled in the process of interviewing managers how you test for judgment? I think when you have money with a manager, you see it over time. You see it play out and then you have either more or less conviction in the manager as a result. How do you think about trying to figure that out before you allocate money to someone? >> That's a great question and I think it can be really hard to do. I think a lot of it is just spending time with the manager and the team and asking, you know, I mean, really, really diving into, especially if it's a younger manager, how do you think about constructing your portfolio? Let's s let's run some scenarios by you. You know, this is what's happening in the markets right now. And sometimes you can use history. Let's talk exactly about what you did then or what you would do and really see how much they've thought through those decision points. It's much easier, of course, if a manager has a track record and you can look, you know, at their exposure management. You can look at the companies that they bought, at their position sizing, and understand how much thought was put into all of those decisions and walk them back through time and say, you know, when when you move to X or Y, one way or another, why were you doing it? And I think you do it enough and you get a sense for who's deliberate in their actions and for who's kind of putting a finger up in the air and and has more of a fly by the seat of their pants, I guess, approach to managing money. But I also think that and I this is sort of relating back to a very specific mistake that I made. there was a very bright manager who did really really you know pretty good work on the credits actually that that he or she purchased but he had he was completely off the reservation when it came to sizing his portfolio and it should have been a red flag and I think it was just like concentrated is better you know I I really want to sort of push the envelope here because I don't think you know at my last organization we didn't take enough concentration and that was a really big problem and I think it you know it led this person to not be able to manage the risk in their portfolio properly. And in hindsight, it was a very obvious thing, but I think especially when you're dealing with young managers, they need to put risk first. And I don't think I think it sounds sexier to to just say, I'm going to put the pedal to the metal in terms of wanting to earn the highest returns. So, that's something that we try to probe for. >> Yeah, there's an interesting parallel when you're talking about a manager in this case who has position sizing issues. um at some point in time they could grow and learn just as you're talking about the lessons that you learn and growing and learning in your process. How do you go about within your organization trying to improve how you learn, how you improve your process, how you make better decisions going forward? I think we are constantly trying to iterate and you know I shared with you an article that I had written a while ago which actually in sharing with you I realized I hadn't read it for a couple of years now but and and it was titled using design thinking to inform inform the investment process and and what does that actually mean design thinking is an alternative to the scientific method which is really based on iterative learning and it's based on you know sort of open-minded problem solving which means you need to create a culture where that's allowed. So, and it's easier said than done actually. I think it's very easy for people to get either very stuck in a process or very stuck in their own minds. So, and this is something I it's one of the main reasons that I keep the team really small here cuz we need to have complete trust amongst each other. We need to have the ability to say in fact this happened at a meeting last week. Um one of my team members said you know I don't like this. I feel like I'm fighting for an idea that I don't fully believe in yet because we have right now more opportunities than capital in this, you know, in our private equity asset class and it doesn't feel intellectually honest because I haven't totally bought into this idea. And then we stopped. This was in the middle of our team meeting and we said, okay, well, how can we, you know, what do we need to do to make our process better in this moment so that you don't feel that way? And we decided that we were going to, you know, set up a separate meeting, kind of not talk about it anymore where everyone on the team, we have a framework that we use essentially grades every opportunity according to this framework. Not so that we can stick with these grades, but because it forces a really intellectually honest discussion around all the managers in the portfolio. And it forces everyone on the team to have a voice and to have an opinion. But it has to be deliberate and it has to be minute-to-minute. And you need to have a team where people are willing to step up and say they've made mistakes, where people are willing to say that they feel uncomfortable about the way decisions are being made. And that's something that I fight for as a CIO every day. And I don't always get it right. But I think it's allowed for a lot of innovation and process improvement. And the same has been true with our investment committee where we were really struggling to find the right way to communicate with them because a lot of investment committees, I think we have a very small and very smart investment committee. It's four people now. It will never get bigger than that. And these are folks with a lot of wisdom to share. But a lot of investment committees at organizations like ours frankly exist to rubber stamp ideas. And it's very easy to get into that model because you meet with them quarterly and you're meeting with your team weekly. And it's hard to find the right balance. But we wanted to be able to use that, you know, to use our investment committee for their wisdom. and we realized we needed to engage them early in our process as opposed to late in their pro our process so they could help make sure that we were asking the right questions. >> I want to turn a little bit to something different in your life than many people in your seat. So your husband Scott is a hedge fund manager. What is dinner conversation like at your household? >> Well, this is maybe not the answer you want, but we try not to talk about work that much. I think we recognize that our worlds are very closely intertwined and there's a little bit of a danger, I think, to to making that too much a part of our dynamic. I, you know, Scott and I have we've been together 17 years. We're we're hitting on our 10-year anniversary this year of marriage. So, we've grown up together in many ways. But while we don't while our dinner table conversation doesn't focus on the investments in our portfolio, and in fact, Scott won't even tell me how they're doing usually until year end. Even though I have edited a letter or two for him, it's always with the numbers blocked out. I do think we've been helpful to each other in terms of thinking about various challenges that might have come up for each of us. And Scott in particular is he always keeps me really focused. you know, he's just he's incredibly disciplined. We have very different personalities. Not saying that I I'm not disciplined as well, but Scott kind of takes it to the next level in everything he does. He's very deliberate about everything he does. And he keeps me on my game. So, even when it came to getting this job, he said, you know, what are you going to do to to really stand out? And he's always asking me that and sort of asking me how I can up my game and keeping me honest. And I really appreciated that. And I think the fact that he is in this business and he's built his business from scratch gives me a little bit of perspective on what it means to build a fund and the time horizon you need to give managers. You know, they've done great over a long period of time, but it's never easy, you know, those first couple years when you just don't know if your business is going to be there over time. So, seeing him manage through that, I think quite elegantly has given me some perspective and patience. the great cliche that it's lonely at the top and you've had the experience you talked about being mentored by Bill Peterson. You have this wonderful investment committee but also throughout the last 15 years you've been involved in trying to engage a community of allocators at different points in your life. Why don't you talk a little bit about the importance of mentorship of developing a community of peers and how that how you've been involved in it? >> Well, I agree with you. I think one of the hardest things when I came into this role as CIO was feeling all of a sudden like I a big portion of my peer group that I had known was relating to me a little bit differently and I couldn't ask some of the same questions I had. I think what initially happened for me in this space was I came to work at the Sloan Foundation. I'm relatively shy and I would show up at annual meetings and sort of beline to the food table and then not really know who to talk to. And I I hated the cocktail hour. I found it very stressful, but every once in a while I'd meet one or two people that were pretty fabulous and maybe also they didn't love the cocktail hour either. And we'd end up getting into a pretty deep conversation um at these meetings. And little by little I was collecting business cards with people that I really admired and liked and wanted to develop deeper relationships with. And I said, you know, maybe there's room for all of us to kind of get together and have some sort of an informal community. So in 2008, I emailed about 13 people, I think, and said, you know, do you guys want to form sort of an informal network? I don't really know what this is going to turn into, but it could just be an email list. I knew it actually already existed at the CIO level, but it it didn't exist at that time at kind of the younger director level. And it turned out that there were a lot of people that felt like me at these meetings. And that group has now grown to, you know, healthfully over a hundred people. Initially, I really didn't want it to get that big, but I think the value of the group has changed and evolved over time. And what it is now is this wonderful group of people that exists across the nation in family offices, endowments, and foundations that know that they have this set that they can reach out to when they might have a question. And more than that, you know, we host events once or twice a year. People develop subgroups of people that they really like and it's just a way for them to connect with people. And I think the mentorship for me has existed beyond that much more on a personal level. Both trying to mentor my team and also being reminded of the fact that the reason I ended up getting the job at the Sloan Foundation in the first place is because a mentor of mine from Stanford put in a good word for me. So I try to be as willing as I can to have conversations with young folks who are interested in this business while also being mindful of my time. It's always a balancing act. Well, let's turn to a couple of closing questions as I like to do in these. Uh, we'll start with what is your favorite thing to do that is a complete waste of time. >> Um, my favorite thing to do that is in some ways a complete waste of time is probably doing art with my daughter Kira. Uh, we actually spent Mother's Day, >> the sweetest non-waste of time I think I've heard on any of these podcasts. Um we we spent Mother's Day uh with sidewalk chalk, you know, just make creating beauty in in a little park by our house and it was so joyful for both of us. And you're right, it isn't a waste of time because it's tremendous quality time with her and it also engages another part of my brain. Um it's the wonderful thing about having kids is that they remind you that there's beauty in the world in ways that you forget to see every day. As I'm saying this, it isn't a waste of time at all. I also like watching billions, I guess. So maybe that's a >> No, that's closer. That's closer. What How about a favorite book? >> Oh my goodness. I have so many. So, one book that I Well, I'm I'm going to give you a couple answers. I can't give just one. I love reading the biographies of great entrepreneurs. So, I've now made my way through Steve Jobs, Elon Musk. Maybe some would argue he's great, some wouldn't, but I think there's some pretty fabulous things about him. Jeff Bezos, you name it. Now I'm reading Phil Knight's book. so good. >> It's great. And it's just it's wonderful to read a bunch of them in sequence and understand the parallels between them and the differences. Beyond that, there's this book called Beyond the Beautiful Forevers that was written by an incredible journalist from the Washington Post who spent seven years living in a slum in India and it's beautifully written and it doesn't trivialize poverty and I didn't realize I was reading a non-fiction book until I was done with it and I just think it's it's a remarkable feat. How about your favorite sports moment either as a participant or a fan? >> It actually happened earlier this year. I've been a big skier since I was three years old. I grew up in Colorado and I had the opportunity to go to a place called Baldface Mountain and uh go backountry skiing for the first time with a group of outstanding skiers. I I had no business being there. These were, you know, skiers at all. There were some former Olympians, there were some current Olympians, lots of folks that had been on, you know, I was on a kind of a competitive ski team in high school, but these were serious competitors. And it was just so thrilling. It was thrilling. >> That's fantastic. What do you know now that you wish you knew 10 years ago? >> What I know now that I wish I knew 10 years ago is the importance of building quality into your life. I think I used to believe in multitasking. I used to believe that I wanted to have lots and lots of stuff in my life filling my time. Or I just did. Maybe I didn't want to, but I just my life was was full, but it was not particularly intentional. And with every year, I try to get more intentional about how I spend my time. I try to do less. My team would probably tell you I'm still not good enough about doing less. But it's something I'm actively working on. And I hope in another 10 years I will have just honed my life into a few things that I love and do really really well. That's sort of what I'm aiming at. >> And one last question. Uh it is your waning days in life. You're about 120 years old now sitting in your rocking chair. What advice would you give yourself today? I imagine that I will tell myself to appreciate the the joy that exists in small moments, to cherish every moment I have with my children, to love the work that I do because it's time away for my kids, so it's not worth doing if I'm not loving it, and to just to live richly. >> Fabulous, Jenny. Thank you so much for the time. >> Thank you. >> Thanks for listening to the show. To learn more, hop on our website at capitalallocators.com where you can join our mailing list, access past shows, learn about our gatherings, and sign up for premium content, including podcast transcripts, my investment portfolio, and a lot more. Have a good one, and see you next time.